Monday, July 26, 2010

The Electronic Rights Dilemna

What Jerry Garcia & Ted Turner Can Teach the Publishing Industry

A Legal Footnote to the Andrew Wylie E-Book Controversy

Random House has its own self to blame for the electronic pickle they find themselves in today. When drafting the original, pre-internet, publishing contracts for Cheever, Nobokov and Updike, they left out the future technology clauses. To be clear, it's not that they didn't know how to draft future technology clauses. They left them out. As such, they just weren't thinking much about the future. Likely, they were doing what was expedient, i.e., signing up books in "book form."

What Was Random House (Not) Thinking?

As early as 1909, publishing attorneys have been thinking about e-books. In 1909, they even included a "future technologies" clause in Mark Twain's publishing contract for his soon-to-be published (as in 2010) autobiography. The "future technologies” clause, which acts as a catch-all for technologies and media not yet invented, has been around for a long while. Narrowly drafted (out of respect for the author's rights and the publisher's legitimate interests), such a clause would have snagged verbatim e-book reading rights.

What the Publishing Industry Can Learn from Captain Trips & Captain Outrageous

What once seemed trivial (i.e., drafting a contract clause), is now upsetting the balance of power in the publishing industry. It's a classic case of an ounce of prevention. Happily, America has a long history of entrepreneurs taking undervalued opportunities (e.g., Turner's purchase of the old -- much undervalued -- MGM/UA film library in 1986) and leveraging them to create great value.

There's a Jerry Garcia lyric that neatly sums it up: "One man gathers what another man spills” That was Turner's modus operandi, when he acquired the pre-1986 MGM, and pre-1950 Warner movie libraries. He dusted them off, colorized them, and started profitable new media ventures. He looked for and found undervalued opportunities and created great value. That's the American way. Is Andrew Wylie a latter day Ted Turner? Is he creating value or merely nibbling away -- unfairly -- at Random's backlist? You be the judge.